Friday, February 10, 2012

"Criminal probe trail going cold at MF Global"

Via a reader.
Serious analysis from Reuters:

When
commodities brokerage MF Global imploded, the FBI and federal
prosecutors were quick to launch an investigation to pursue what seemed
obvious to outspoken regulators and lawmakers: laws were broken and
crimes were committed.

More than three months later,
it is far from clear that anyone will face criminal charges over the
disappearance of more than $600 million in customer money as MF Global
spiraled towards bankruptcy in the brokerage's final, frantic days in
the last week of October.

So far,
the MF Global investigation is not tracking the early progress of other
high-profile financial scandals such as RefCo, where former Chairman
Phil Bennett was arrested within days of the disclosure that the futures firm had been hiding losses for years.

Lawyers
and people familiar with the MF Global investigation of the firm that
was run by former Goldman Sachs head Jon Corzine say that even though
the hunt is still on to find out whether or not officials at MF Global
intended to pilfer customer money in a desperate bid to keep the
brokerage from failing, the trail at this point is growing cold.

To
date, scant evidence of criminal intent has emerged in company emails,
no former or current employees have sought to cut a deal to provide
testimony about potential wrongdoing and seasoned defense lawyers say
they are not seeing the tell-tale signs of a hot criminal investigation.

A
source familiar with the work of Louis Freeh, trustee for the MF Global
holding company that filed for Chapter 11 bankruptcy protection, says
investigators have yet to find evidence of fraud in the multi-faceted
and complex investigation.

The
source, who declined to be identified because Freeh's office is still
conducting its inquiry, says there was plenty of "chaos" at MF Global in
its waning days, but "no evidence of fraud." Freeh is a former Director
of the Federal Bureau of Investigation.

Ellen
Davis, a spokeswoman for the office of the Manhattan U.S. Attorney,
declined to comment. Randall Samborn, a spokesman for the office of the
U.S. Attorney in Chicago, also declined to comment.

Criminal
and regulatory investigations can of course shift gears at any time if
new information comes to light. But adding up the pieces at this stage
of the inquiries, the odds look long of criminal charges ever stemming
from the collapse of MF Global because of the lack of bad motives or an
intent to steal or deceive, the legal standard for a criminal case.

One
securities lawyer in New York who is not involved in the case said that
for the past month or so it's been "radio silence" when it comes to the
work of the FBI and prosecutors in Chicago and New York. Usually when
an investigation heats up, so does the rumor mill, the lawyer said.

Also,
people familiar with the situation said, some executives and employees
who in the normal course of an investigation would have been interviewed
by authorities at this stage have not been asked to provide their
version of events....MORE